Federal Communications Commission DA 08-1076 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Time Warner Cable Inc. Petitions for Determination of Effective Competition in Various Pennsylvania Communities ) ) ) ) ) ) ) ) CSR 7726-E CSR 7722-E MEMORANDUM OPINION AND ORDER Adopted: May 7, 2008 Released: May 8, 2008 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. Time Warner Cable Inc. (“Time Warner”), hereinafter referred to as “Petitioner,” has filed with the Commission petitions pursuant to Sections 76.7, 76.905(b)(2), 76.905(b)(1) and 76.907 of the Commission’s rules for a determination that Petitioner is subject to effective competition in those communities listed on Attachment A and hereinafter referred to as “Communities.” Petitioner alleges that its cable systems serving the communities listed on Attachment B and hereinafter referred to as “Group B Communities” are subject to effective competition pursuant to Section 623(1) of the Communications Act of 1934, as amended (“Communications Act”)1 and the Commission’s implementing rules,2 and are therefore exempt from cable rate regulation in the Communities because of the competing service provided by two direct broadcast satellite (“DBS”) providers, DirecTV, Inc. (“DirecTV”) and Dish Network (“Dish”). Petitioner additionally claims to be exempt from cable rate regulation in the communities listed on Attachment C and hereinafter referred to as “Group C Communities” because the Petitioner serves fewer than 30 percent of the households in the franchise area. The petitions are unopposed. 2. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition,3 as that term is defined by Section 623(l) of the Communications Act and Section 76.905 of the Commission’s rules.4 The cable operator bears the burden of rebutting the presumption that effective competition does not exist with evidence that effective competition is present within the relevant franchise area.5 For the reasons set forth below, we grant the Petitions based on our finding that Petitioner is subject to effective competition in the Communities listed on Attachment A. 1See 47 U.S.C. § 543(a)(1). 247 C.F.R. § 76.905(b)(2) and 47 C.F.R. § 76.905(b)(1). 347 C.F.R. § 76.906. 4See 47 U.S.C. § 543(l) and 47 C.F.R. § 76.905. 5See 47 C.F.R. §§ 76.906 & 907. Federal Communications Commission DA 08-1076 2 II. DISCUSSION A. The Competing Provider Test 3. Section 623(l)(1)(B) of the Communications Act provides that a cable operator is subject to effective competition if the franchise area is (a) served by at least two unaffiliated multi-channel video programming distributors (“MVPD”) each of which offers comparable video programming to at least 50 percent of the households in the franchise area; and (b) the number of households subscribing to programming services offered by MVPDs other than the largest MVPD exceeds 15 percent of the households in the franchise area;6 this test is otherwise referred to as the “competing provider” test. 4. The first prong of this test has three elements: the franchise area must be “served by” at least two unaffiliated MVPDs who offer “comparable programming” to at least “50 percent” of the households in the franchise area.7 5. Turning to the first prong of this test, it is undisputed that the Group B Communities are “served by” both DBS providers, DIRECTV and Dish, and that these two MVPD providers are unaffiliated with Petitioner or with each other. A franchise area is considered “served by” an MVPD if that MVPD’s service is both technically and actually available in the franchise area. DBS service is presumed to be technically available due to its nationwide satellite footprint, and presumed to be actually available if households in the franchise area are made reasonably aware of the service's availability. The Commission has held that a party may use evidence of penetration rates in the franchise area (the second prong of the competing provider test discussed below) coupled with the ubiquity of DBS services to show that consumers are reasonably aware of the availability of DBS service.8 Petitioner has demonstrated that this is the case.9 The “comparable programming” element is met if a competing MVPD provider offers at least 12 channels of video programming, including at least one channel of nonbroadcast service programming.10 Time Warner indicates that the program offerings are available on the websites of both DIRECTV and Dish, and we have reviewed their websites and confirmed that their program offerings meet the test.11 Also undisputed is Petitioner’s assertion that both DIRECTV and Dish offer service to at least “50 percent” of the households in the Group B Communities because of their national satellite footprint.12 Accordingly, we find that the first prong of the competing provider test is satisfied. 6. The second prong of the competing provider test requires that the number of households subscribing to MVPDs, other than the largest MVPD, exceed 15 percent of the households in a franchise area. Petitioner states that it is the largest MVPD in all but six of the Group B Communities.13 With regard to Columbus, Elk Creek, Mineral, Oakland, Sugar Grove and Waterford townships, the Petitioner is unable to prove which MVPD is the largest. 14 Petitioner sought to determine the competing provider 647 U.S.C. § 543(1)(1)(B); see also 47 C.F.R. § 76.905(b)(2). 747 C.F.R. § 76.905(b)(2)(i). 8Mediacom Illinois LLC et al., Eleven Petitions for Determination of Effective Competition in Twenty-Two Local Franchise Areas in Illinois and Michigan, 21 FCC Rcd 1175 (2006). 9 Petition CSR 7726-E at 5-6, 8-9; Petition CSR 7722-E at 4-5, 7-8. 10See 47 C.F.R. § 76.905(g). See also Petition CSR 7726-E at 6; Petition CSR 7722-E at 5. 11See Petition CSR 7726-E at 7; Petition CSR 7722-E at 5-6. 12See Petition CSR 7726-E at 7; Petition CSR 7722-E at 6. 13Petition CSR 7726-E at 8; Petition CSR 7722-E at 7. 14Petition CSR 7726-E at 8; Petition CSR 7722-E at 7. Federal Communications Commission DA 08-1076 3 penetration in the Group B Communities by purchasing a subscriber tracking report from the Satellite Broadcasting and Communications Association (“SBCA”) that identified the number of subscribers attributable to the DBS providers within the Group B Communities on a five-digit zip code basis and using a five-digit allocation formula previously approved by the Commission.15 7. Based on the data provided, the failure to identify the largest MVPD in Columbus, Elk Creek, Mineral, Oakland, Sugar Grove and Waterford townships is not fatal. While it is undetermined which provider is the largest in these townships, the DBS subscriber penetration levels that were calculated using Census 2000 household data16 reflect that the aggregate subscribership for the DBS Providers in these six communities ranges from 17.92 to 42.31 percent and Petitioner’s subscriber total in each exceeds 15 percent.17 Because Petitioner and the DBS providers each serve more than 15 percent of the households in Columbus, Elk Creek, Mineral, Oakland, Sugar Grove and Waterford townships, the subscriber base of any MVPD, other than the largest, exceeds the 15 percent threshold in these communities. 8. With respect to the other Communities, based upon the aggregate DBS subscriber penetration levels that were calculated using Census 2000 household data,18 as reflected in Attachment A, we find that Petitioners have demonstrated that the number of households subscribing to programming services offered by MVPDs, other than the largest MVPD, exceeds 15 percent of the households in the Communities. Therefore, the second prong of the competing provider test is satisfied for each of the Communities. 9. Based on the foregoing, we conclude that Petitioner has submitted sufficient evidence demonstrating that both prongs of the competing provider test are satisfied and Petitioner is subject to effective competition in the Group B Communities. B. The Low Penetration Test 10. Section 623(l)(1)(A) of the Communications Act provides that a cable operator is subject to effective competition if the Petitioner serves fewer than 30 percent of the households in the franchise area; this test is otherwise referred to as the “low penetration” test.19 Petitioner alleges that it is subject to effective competition under the low penetration effective competition test because it serves less that 30 percent of the households in each of the Group C Communities. 11. Based upon the subscriber penetration level calculated by Petitioner, as reflected in Attachment C, we find that Petitioner has demonstrated the percentage of households subscribing to its cable service is less than 30 percent of the households in each of the Group C Communities. Therefore, the low penetration test is also satisfied as to the Group C Communities. 15Petition CSR 7726-E at 9; Petition CSR 7722-E at 8. See also, Charter Communications Properties, LLC, 17 FCC Rcd 4617 (2002); Charter Communications, 17 FCC Rcd 15491 (2002); Falcon First, Inc., 17 FCC Rcd 16629 (2002); Falcon Community Cable, L.P., 17 FCC Rcd 22162 (2002); Charter Communications, LLC, 19 FCC Rcd 7003 (2004). 16Petition CSR 7726-E at 8-9, Exhibit E; Petition CSR 7722-E at 7-8, Exhibit E. 17See Petition CSR 7726-E at 8-9, Exhibits A & E; Petition CSR 7722-E at 7-8, Exhibits A & E. 18 Petition CSR 7726-E at 8-9, Exhibit E; Petition CSR 7722-E at 7-8, Exhibit E. 1947 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1076 4 III. ORDERING CLAUSES 12. Accordingly, IT IS ORDERED that the petitions for determination of effective competition filed in the captioned proceeding by Time Warner Cable Inc. ARE GRANTED. 13. IT IS FURTHER ORDERED that the certification to regulate basic cable service rates granted to any of the Communities set forth on Attachment A IS REVOKED. 14. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules.20 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 2047 C.F.R. § 0.283. Federal Communications Commission DA 08-1076 5 ATTACHMENT A CSRs 7726-E, 7722-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Communities CUID(S) Albion PA2262 Clark PA1438 Columbus PA0217 Concord PA0218 Conneaut PA2329 Conneautville PA0581 Corry PA0219 Cranberry PA0206 Cranesville PA2263 Delaware PA3199 Elgin PA 2196 Elk Creek PA2330 Fairview PA1796 Farrell PA1439 Franklin PA0207 Fredonia PA2316 Frenchcreek PA0208 Girard PA1797 Girard PA1798 Greene PA2326 Greenville PA0072 Harborcreek PA1549 Hempfield PA0073 Hermitage PA0485 Jackson PA2880 Jefferson PA2869 Lackawannock PA2870 Lake City PA1799 Lawrence Park PA1091 McKean PA2327 McKean PA2328 Federal Communications Commission DA 08-1076 6 Millcreek PA0932 Mineral PA3147 North East PA1749 North East PA1750 Oakland PA2881 Platea PA2367 Polk PA2617 Pymatuning PA1738 Sandycreek PA0209 Sharpsville PA0487 Shenango PA2507 South Pymatuning PA2506 Spring PA3443 Springboro PA0595 Springfield PA2325 Sugarcreek PA0210 Sugar Grove PA2474 Summit PA2140 Union PA0075 Union City PA0074 Waterford PA2195 Waterford PA2269 Wayne PA0220 Wesleyville PA0933 West Middlesex PA1553 West Salem PA0076 Wheatland PA1440 Wilmington PA3306 Wilmington PA2895 Federal Communications Commission DA 08-1076 2 ATTACHMENT B CSRs 7726-E, 7722-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Communities CUID CPR* 2000 Census Household Estimated DBS Subscribers Albion PA2262 35.53 655 233 Clark PA1438 16.08 227 37 Columbus PA0217 54.05 663 358 Conneautville PA0581 46.24 352 163 Corry PA0219 25.27 2660 672 Cranesville PA2263 34.98 216 76 Elgin PA2196 25.25 84 21 Elk Creek PA2330 23.58 653 154 Fairview PA1796 16.24 3535 574 Farrell PA1439 15.15 2504 379 Franklin PA0207 23.35 3030 708 Fredonia PA2316 39.78 252 100 Frenchcreek PA0208 29.00 662 192 Girard PA1798 25.58 1955 500 Girard Borough PA1797 26.80 1226 329 Greene PA2326 23.24 1724 401 Greenville PA0072 25.23 2464 622 Harborcreek PA1549 20.43 5398 1103 Hempfield PA0073 25.23 1590 401 Hermitage PA0485 15.31 6809 1042 Jefferson PA2869 16.52 958 158 Lackawannock PA2870 17.24 909 157 Lake City PA1799 19.45 1025 199 Lawrence Park PA1091 16.97 1547 262 McKean PA2328 21.69 1649 358 McKean Borough PA2327 31.38 150 47 Millcreek PA0932 15.76 21217 3344 Mineral PA3147 54.30 208 113 North East PA1750 30.46 2485 757 North East Borough PA1749 30.46 1730 527 Oakland PA2881 24.12 575 139 Platea PA2367 28.19 172 48 Polk PA2617 54.30 196 106 Pymatuning PA1738 26.05 1519 396 Sandycreek PA0209 26.92 832 224 Sharpsville PA0487 16.08 1912 307 Shenango PA2507 21.53 1637 352 South Pymatuning PA2506 23.35 1131 264 Springboro PA0595 44.91 183 82 Springfield PA2325 29.11 1253 365 Sugarcreek PA0210 22.70 2093 475 Sugar Grove PA2474 54.88 649 356 Summit PA2140 21.50 2110 454 Union City PA0074 32.50 1326 431 Waterford PA2269 35.30 1362 481 Waterford Borough PA2195 37.77 558 211 Wayne PA0220 28.33 642 182 Wesleyville PA0933 18.78 1441 271 Federal Communications Commission DA 08-1076 3 Communities CUID CPR* 2000 Census Household Estimated DBS Subscribers West Middlesex PA1553 19.27 372 72 West Salem PA0076 28.10 1314 369 Wheatland PA1440 15.15 349 53 Wilmington PA3306 PA2895 22.65 380 86 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-1076 4 ATTACHMENT C CSRs 7726-E, 7722-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Franchise Area Cable Penetration Communities CUID Households Subscribers Percentage Concord PA0218 490 22 4.49 Conneaut PA2329 740 83 11.22 Cranberry PA0206 2843 84 2.95 Delaware PA3199 806 55 6.82 Jackson PA2880 422 54 12.80 Spring PA3443 577 6 1.04 Union PA0075 598 42 7.02